Author Archive | Lisatest Knight

The 3 Most Important Interview Questions

important interview questionsPreparing for a job interview can be intimidating. What should you wear?  Will you be able to find the place?  How early should you arrive? But probably the most terrifying concern of all is “What questions will they ask?”.

3 Important Interview Questions

Bernard Marr wrote a great article on LinkedIn that can help take some of the stress out of preparing for your next interview.  He contends that most interviewers are really only trying to establish answers to 3 key questions:

  1. Have you got the skills, expertise and experience to perform the job?
  2. Are you enthusiastic and interested in the job and the company?
  3. Will you fit into the team, culture and company?

Aside from that one oddball interview we’ve all had, most interviewers truly want to get a sense of who you are, why you want the job, and how you’ll fit in.  They may come at each of these questions from a variety of angles, but all paths of inquiry really lead back to these essential issues.

To learn more about what’s behind each of these questions as well as the ways an interviewer may ask them, check out Bernard’s article here.

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Results: Average Tenure of a CFO Survey

Over the past few months, we conducted a survey of hundreds of financial professionals in an effort to determine the average tenure of a CFO in today’s world. Participants were asked:

Length of time in current job – less than 3 years, 3-5 years, 6-9 years, 10+ years

Current titleCFO, Controller, Asst. Controller, Accountant, Other

GenerationMillennial or Generation Y (1980-2000), Generation X (1965-1979), Baby Boomer (1946-1964), Silent Generation (1925-1945)

Average Tenure of a CFO Survey Results

Notable results include:

  • Average tenure = 5.47 years
  • 78% of participants held the title of CFO
  • 93% of participants were from Generation X or Baby Boomers

We also summarized the average tenure by job title and by generation.  As shown in the charts below, CFOs and Assistant Controllers had the longest tenure by job title and length of tenure tended to increase with the age of the respondent.

average tenure of a cfoaverage tenure of a cfo

Thanks so much for all of you who participated!  Leave a comment below to let us know what other issues you’d like us to survey.average tenure of a cfo

 

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Black Swan Events

black swan events

The “mythical” black swan

You may have heard the term “Black Swan Event“, particularly recently.  But what exactly is a black swan event and what can, and should, we learn from them?

The notion of black swan events was first set forth by Nassim Nicholas Taleb. Taleb, a finance professor and former Wall Street trader, wrote about this concept in his 2001 book Fooled by Randomness which concerned financial events. In a later work, The Black Swan, Taleb extends the metaphor to events outside the financial markets.  He defines three attributes that are common to all black swan events:

  1. The event is unpredictable (to the observer)
  2. The event has widespread ramifications
  3. After the event has occurred, people will assert that it was indeed explainable and predictable (hindsight bias).

Where did the term “Black Swan” come from?

The origin of the use of the term “black swan” to characterize such events is interesting.  Prior to 1697, any Western civilization has not observed any black swan. This gave rise to the notion that such creatures didn’t exist.  Hence, the term became used to describe situations of impossibility.  After a black swan was finally observed in western Australia in 1697, the notion was disproved.  Since then, “black swan” describes situations where perceived impossibilities have been disproven and paradigms have been shattered.

What are some examples of Black Swan events?

Examples Taleb gives of black swan events include the rise of the Internet, the personal computer, World War I, the dissolution of the Soviet Union and the September 11, 2001 terrorist attacks.  He underscores the point that the black swan event depends upon the observer.  The Thanksgiving turkey sees his demise as a black swan, but the butcher does not.

Isn’t a Black Swan just another way to define a crisis?

It’s important to draw the distinction between a black swan event and a crisis.  Not all black swan events are crises, any lottery winner will attest to that.  And not all crises are black swan events.  Terrorist attacks are an almost daily occurrence worldwide, but the terrorist attacks of September 11, 2001 were of unprecedented magnitude and unpredictability, hence their characterization as a black swan.

How can we deal with Black Swan events?

How can we avoid becoming the Thanksgiving turkey?  According to Taleb, not by attempting to predict the unpredictable.  Rather, he says our time would be better spent preparing for the impact of negative black swans that occur. In addition, he advises that we position ourselves to be able to exploit the positive ones.

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5 Stages of Business Grief

stages of business griefDo companies experience stages of business grief? No college psychology class would be complete without a discussion of the 5 stages of grief outlined by Elisabeth Kubler-Ross in her 1969 book On Death and Dying.

The Stages of Business Grief

For those of you who skipped (or slept through) the lecture, the 5 stages are:

  • Denial
  • Anger
  • Bargaining/Rationalization
  • Depression/Despair
  • Acceptance

So, do businesses experience similar stages of business grief when faced with crisis or catastrophe? In a recent post, we explored how (and whether) Houston businesses are dealing with the sharp drop in oil prices over the past 6 months. It would be naïve to think that the situation won’t result in a crisis for at least some of Houston’s businesses.

Deal with Crisis

To explore how a business might deal with such a crisis, we wrote an article that talks about the 5 stages of grief and how they might manifest themselves in a business setting. Click here to check it out.

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The 5 Stages of Business Grief

In her 1969 book On Death and Dying, Elisabeth Kubler-Ross outlines the five stages of grief individuals experience when faced with catastrophic personal loss. The five stages are as follows:

The 5 Stages of Business Grief

In one form or another, businesses too experience these five stages when faced with crisis or catastrophe. These 5 stages of business grief are related to loss. For a business, this can be loss of income, customers or the enterprise as a whole.

While an individual must progress through the grief cycle at their own pace, it’s important for businesses to arrive at the final stage of acceptance as soon as possible so that corrective action can be taken before things get too far out of hand. The following is an illustration of how each of the 5 stages of business grief might play out in a company.

Stage 1 – Denial

The first stage of business grief is denial. The business owner may try to shut out reality or create an alternate reality that is preferable. They may also try to convince themselves that the situation is just temporary or that the crisis won’t affect them or their industry. Some may even hire consultants to validate the status quo rather than deal with the problem.

Stage 2 – Anger

The delayed reaction caused by denial gives rise to feelings of anger. At this stage of business grief, the business owner may start to play the blame game. Why are greedy suppliers flooding the market and driving down prices? Also, why are my customers so disloyal and squeezing me on my pricing? Why can’t my people just do their jobs right? Eventually, some owners may turn the blame inward and chastise themselves for not seeing the crisis coming.

Stage 3 – Bargaining/Rationalization

At this stage of business grief, business owners will often reach out to third parties to weather the storm. Some will ask vendors to extend payment terms. Some will negotiate with bankers for cushion on debt covenants or to extend lines of credit. Many daydream about the big contract they’re about to win that will turn things around.

Stage 4 – Depression/Despair

Oftentimes, bargaining during a crisis doesn’t solve the problem. Vendors are often over-extended to their suppliers, banks are having to tighten up on controls and customers are hesitant to take on new projects due to uncertainty. When the reality of the situation dawns, owners may fall into despair. After all, what’s the point in soldiering on if the underlying cause is out of your control?

Stage 5 – Acceptance

Most business owners are made of pretty sturdy stuff and will not allow themselves to wallow in self-pity for long. Consequently, they will make peace with the threat and begin to develop a strategy to deal with it. How? By focusing on what’s working and eliminating what isn’t. Transfer resources to more profitable products and eliminate those products that kill margins. Hug their best customers and fire the problem ones. Unleash the creativity in their best employees and purging the ranks of bad hires.

Crisis and catastrophe are inevitable in a business. The key is to recognize the crisis and resolve the 5 stages of business grief quickly to get back on track.

To learn more financial leadership skills, download the free 7 Habits of Highly Effective CFOs.

5 stages of business grief

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5 Stages fo Business Grief

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